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Proper Way to Insource

Martin Winter, Principal Consultant for ISG, recently published an article at info.ISG-One.com, and said businesses from major outsourcing markets are increasingly seen bringing outsourced processes back home because of various reasons. However, he noted that some decision makers are using insourcing unfittingly.

Backsourcing was also mentioned in the article and Winter said it is more appropriate for insourcing’s context, which is basically to bring subcontracted work back in-house.

Factors to take into account when considering backsourcing

For business owners who are considering backsourcing for their operations, here are some things to take into account:

Lay out a clear motive first before making a move. There are several reasons why business owners choose to pull outsourced operations back. For example, they are seeing a spike in the cost of services. Another one is when the initial contract terms are no longer applicable to the current operation. Your reason for backsourcing should also stem from the business side of the company and should not be used as a quick solution to fix unexpected problems. Make sure you are not short-staffed. Some of the employees who were initially working internally are often absorbed by the outsourcing service provider, given a different assignment or they resign. Before backsourcing, review the capabilities of your internal staff first and hire accordingly. Create an integration plan. For businesses that are involved in multisourcing setups, they would have to evaluate first if backsourcing can be integrated seamlessly. Some of the areas they would have to look into are technological capacities, contract provisions, and management arrangements. This would avoid the disruption of the current process and minimize misuse of funds and time.

Create a transition team. They make the integration part of backsourcing easier for business executives. They will also help business owners maximize the potential of the backsourced processes, and can perform debriefing tasks should they choose to just switch providers instead of taking work back internally.Document all the details of the backsourcing process. Not only will you have a benchmark for the next backsourcing operation, you will also have better control of the expenses since you have an idea of the costs and risks included in both outsourced and internal operations. Also, make sure to list down the progress and improvements of your strategy and how you were able to achieve desired goals.